New government proposals to protect savers when a bank goes under don’t go far enough, Which? has warned.
The measures – announced by Chancellor Alistair Darling – are aimed at strengthening the financial system and boosting consumer confidence following the near-collapse of Northern Rock last year.
As part of the plans, the threshold for guaranteed deposits is expected to rise from £35,000 to £50,000.
Under the plans, savers would get their money back quicker.
Currently if a bank gets into difficulties, it can take weeks or even months before savers get their money back.
Under the proposals, people would receive at least some of their money after a week, with the balance paid a few days later.
But Which? believes savers should receive compensation payouts within three days.
Which? personal finance campaigner Vera Cottrell, said: ‘These proposals still won’t offer enough protection to people with savings.
‘Payouts must be faster than the proposed seven days to make the disruption to people’s lives as little as possible.
‘They should also be per brand rather than per bank. Say, for example, you had accounts with Halifax and Bank of Scotland – you should get separate payouts for each account but these proposals mean you’ll just get one as they’re run by the same bank.’
Which? is also calling for consumers to be automatically protected for a limited period of time if their savings are above the normal compensation limit.
This would happen, for example, if they have received an amount above the proposed £50,000 limit from a house sale or pension or insurance lump-sum payment.
The government plans to introduce legislation on the issues this autumn, following a further period of consultation.